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Buying a commercial property? Secure your entitlement to claim capital allowances on any fixtures.

Posted on Wednesday, 12th June 2013 by

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Make sure that when you buy a commercial property you secure your entitlement to claim capital allowances on any fixtures.

The changes to the capital allowances treatment of fixtures in commercial buildings has now been in place for a year.   These say that once an amount of expenditure on a fixture has been recognised for capital allowances purposes in the hands of one owner, no subsequent owner can claim capital allowances on a higher amount. This is achieved by limiting each new owner’s expenditure that can qualify for allowances to the amount of the “disposal value” recognised by the previous owner (this being capped at the original purchase price).

Practical issues

Whilst there is a two year window for this to be resolved, it is much easier to ensure that the issues are dealt with as part and parcel of the conditions for its purchase.

As is set out in the details below, the buyer’s entitlement to capital allowances on fixtures (assuming that it or any future owner would want to claim them) can be wholly dependent on a previous owner’s tax position including:

  • Whether that owner was entitled to allowances.
  • Whether it claimed them.
  • The amount of the disposal value that it brought, or will bring, into account as a result of a sale.

It might not be just the current sale and purchase that needs to be investigated; the current sale might not be one to which the requirements apply, so that a previous sale may be the relevant one.

The buyer is reliant on the co-operation of the seller to provide information in order to support their future capital allowances claims, and this is much easier to obtain as part of the sale process rather than relying on their goodwill afterwards.

Leanne is a Chartered Tax Adviser, specializing in advising on UK tax matters but also including overseas tax as needed. Leanne is head of Taxation Services at EHL Solicitors in Leicester.

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Leanne Hathaway - Tax and Trusts
Leanne Hathaway - Tax and Trusts
leanne.h@ehlsolicitors.co.uk 01455 274 170
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